Republicans point to continued job losses to call stimulus a failure

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President Barack Obama has traveled the country to sell voters on the stimulus package, making a pitch that emphasized urgency and immediacy. Will it work?

The White House tried to regain its footing Thursday after weeks of getting attacked by Republicans who call the $787 billion stimulus plan a failure, with the president’s top stimulus thinkers saying the plan wasn’t designed to turn around the economy overnight but instead to blunt the worst effects of the recession.

The president’s team told reporters that the massive spending plan is a two-year program that they always knew would take time to ripple through the economy – an attempt to rebut Republicans who say the current 9.5 percent national unemployment rate shows the program isn’t working.

“This goes out to September of 2010,” White House press secretary Robert Gibbs told reporters. “There is a two-year arc to this.”

But some economists say the administration’s current defensiveness is the result of a key structural mistake — the rhetoric in the White House’s sales pitch didn’t match up to the reality of the stimulus program they were selling.

Team Obama

President Barack Obama has traveled the country to sell voters on the stimulus package, making a pitch that emphasized urgency and immediacy.

In a town hall meeting in Elkhart, Ind., on Feb. 2, Obama underscored the urgency of passing a stimulus bill quickly: “We can’t afford to wait,” the president said. He talked about giving the economy a “jump start,” and he said America needed help “right now.” He used one word again and again: “immediately.”

In each speech, the president was sure to note that recovery would take years, not weeks or months. “I can certainly find you a number of transcripts where the president says things are going to get worse before they can get better,” Gibbs said on Thursday. He’s right: In President Obama’s first press conference on February 9, he accurately predicted that the jobs picture would be grim.

“It's important for us to have a bill of sufficient size and scope that we can save or create 4 million jobs,” the president said then. “That still means that you're going to have some net job loss, but at least we can start slowing the trend and moving it in the right direction.”

But Obama’s overall emphasis was that the stimulus would begin working quickly. The buzz word became “shovel-ready” – projects that could begin right away. In Fort Myers, Fla., three days before the bill passed, Obama said, “this plan will put people to work right now.”

All this presents a dicey political problem for the young administration. “In our current news cycle, there’s this expectation that things are going to turn around quickly,” said Steve Elmendorf , a Democratic lobbyist. “Facts drive news, and the fact of the unemployment number is a tough story to push back against. This isn’t an opinion – it’s a real number about people’s lives.”

Vice President Joe Biden’s chief economist Jared Bernstein, however, told reporters that it was never possible for the stimulus package to simply erase the job losses created by the recession – which he pointed out is by far the worst since the Great Depression. There is no way, he said, that stimulus “would close a two-trillion dollar output gap in and of itself.”

And the stimulus clearly has put people to work. But it hasn’t put nearly as many people to work as have lost jobs in the midst of the economic buzz saw of 2009. And as impatient as voters can be, the program is designed to build steam gradually. The White House said Thursday that it has spent 28.8 percent of the stimulus money so far, which is exactly according to plan.

Partly, the officials said, the slow roll out is designed to make sure that the money is spent on responsible and useful projects. “If what you wanted to do was just burp money into the economy,” Gibbs said, “I could throw cash out onto the street from Marine One. And it would be very popular.

In many ways, the expectations trap has been looming for months. “Whatever you say about ‘shovel ready,’ it takes time to spend infrastructure money, and we all knew that,” said Alice Rivlin, who served as the director of the Office of Management and Budget under President Bill Clinton. As a result, she said, the White House allowed expectations to grow. “People were going to say, ‘Ah, yes, the stimulus bill is going to stop the recession.’ And that was never realistic.’

To Rivlin, the White House would have done well to keep infrastructure spending out of the stimulus bill all together. “I think they made a mistake on shovel-ready projects, and I think that stimulus should be getting money out the door quickly, on things like unemployment, food stamps, tax benefits and money to the states.”

David Walker, president of the Peter G. Peterson Foundation, largely agrees. Walker was Comptroller General of the United States and head of the Government Accountability Office under presidents Clinton and George W. Bush. “The bill was sold as something it wasn’t,” Walker said. “There wasn’t enough stimulus. A number of people had agendas other than stimulus, and they began adding those agenda items to the stimulus package.”

With one eye on the president’s poll numbers, Republicans have seized on the opportunity to declare the stimulus bill a failure. "Where I'm looking is where families of Virginia and America are looking and that's at the unemployment rate, which is skyrocketing," said House Republican Whip Eric Cantor (R-Va.) on Thursday. "The reality is that people are losing their jobs. Families are going into economic free-fall."

Biden traveled to Cantor’s hometown, Richmond, Va., on Thursday to jab the congressman for opposing the stimulus, even though Biden said it was already showing tangible results in Virginia.

But the polls haven’t been kind to Obama on the stimulus. A Wall Street Journal/NBC poll in June found that 58 percent of Americans say Washington should keep the deficit down, even if that means economic recovery will take longer.

And there’s not likely going to be much respite from the economic bad news. Asked on ABC’s Good Morning America last week if unemployment could hit 11 percent, the legendary investor Warren Buffett said, “I wouldn’t be surprised … The best days of America by far lie ahead. But not next week or next month.” Buffett said a second stimulus proposal could be a good idea. “I think a second one may well be called for. Any stimulus acts with a delay, including the first one,” said Buffett. “Our first stimulus bill, it seemed to me, was sort of like taking a half a tablet of Viagra. … It doesn’t have really quite the wallop that might have been anticipated.”

The good news for the president, to the extent that there is any, is that political momentum zigs and zags even more than the jittery Dow Jones Industrial Average. It was just last month that the jobs report was better than expected, prompting a general sigh of relief in the media and a round of praise for the president. Noted New York Times writer Peter Goodman: “The myriad programs of the Obama administration appear to have taken the edge off the financial crisis while generating momentum toward economic recovery that remains, by most estimates, at least several months away.”

In fact, things were looking so good after the last jobs report came out that economic blogger Scott Grannis – who never liked the stimulus bill anyway – suggested Congress ought to repeal it altogether.

As we now know, it was most likely unnecessary, since the economy seems well on its way to recovery with virtually zero help from stimulus spending,” Grannis wrote.

So the tight political squeeze the White House finds itself in this week could change with the next jobs report.